PNC Infratech Limited (PNCINFRA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the PNC Infratech Limited Q2 FY '26 Earnings Conference Call hosted by PhillipCapital India Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not -- guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vikram Suryavanshi. Thank you, and over to you, sir.

Thank you, Alisha. Good afternoon, and a very warm welcome to everyone. On behalf of PhillipCapital, I'm pleased to welcome you all on the PNC Infratech Limited Second Quarter FY '26 Earnings Call. We have with us Managing Director of the company, Mr. Yogesh Jain, along with Mr. D.K. Agarwal, Chief Financial Officer; and Mr. Pankaj Agarwal, Vice President. We will begin with the opening remarks from the management, followed by interactive question-and-answer session. Over to you, sir. Good afternoon, everyone.

On behalf of PNC Infratech Limited, I extend a very warm welcome to everyone for joining us today on this call. Today, I have with me Mr. T. R. Rao, Director, Infra; and Mr. D.K. Agarwal, CFO; Mr. Pankaj Agarwal, VP, F&D and Strategic Growth Adviser, our Investor Relations Advisers. The financial results and investor presentation have been uploaded on the stock exchange and the company website for your reference. Initially, I would like to mention key update of the industry, followed by operational development of the company and highlights of the financial performance during the quarter and half year ending 30th September '25, post which we will be happy to answer your questions. In quarter 2 financial year '26, the road infrastructure sector reported modest performance with project execution remaining subdued as construction activity declined to 644 kilometers, down from 802 kilometers in the corresponding period last year, mainly due to subdued project awarding activity by the authority over the past 2.5 years and widespread intense and prolonged monsoon across nation this year. NHI has set an ambitious target of 6,300 kilometer of new projects award for financial year '26, which is expected to generate substantial new business for the industry players going forward. NHI launched a huge new project pipeline comprising over 120 projects to be implemented on EPC, HAM, DBFOT [indiscernible] with an estimated capital cost of INR 3 lakh crores. The whole industry is looking for a speedy conversion of this pipeline into awarding for turnaround of the sector and to create a strong execution visibility from financial year '27 onwards. The tightening of RFP norms to improve the quality and speed of project execution, including stricter qualification criteria and more accountability on performance are expected to ensure projects are awarded to all the credible construction firms with proven technical and financial competence. In water sector, [indiscernible] moved significantly closer to realizing the government [indiscernible] vision driven by rapid network expansion, use of digital monitoring system and active participation from local communities. This development will generate robust O&M revenue stream to the firms executed to the capital works over the next 10 years. Various jobs of Indian Railways, different subsidiaries of Coal India, various undertaking of Union Power Ministry are coming out with the large number of new projects in track construction, coal mining, power transmission and renewable energy for bidding, which provided promising business opportunities for infra player. Now coming to the recent updates on the company. Our subsidiary, [indiscernible] Highways Private Limited has received the provisional completion certificate for the M 1B HAM project in Uttar Pradesh on 15th September '25, declaring it fit for entry into commercial operation with effect from 30th August 2025. In quarter 2 financial year '26, company received an bonus of INR 508 crores for [indiscernible] during quarter 2. During quarter 2 financial year '26, company received letter of award from Bihar State Road Development Corporation for high-level bridge construction on high level bridge along with [indiscernible] in Bihar second from Airports Authority of India for the development of [indiscernible] International Airport. Third from NHPC for the solar power [indiscernible] company has received appointed dates for three projects, Varanasi–Kolkata Highway Packages 2, 3 and 6. During the quarter, company also received appointed date for EPC project in Rajasthan for construction of fly in Bharatpur City I am happy to share during the quarter, credit rating of 4 of company subsidiaries have been upgraded significantly. At Highway upgraded from [indiscernible] to [indiscernible] upgraded from [indiscernible] upgraded from [indiscernible] Express upgraded from [indiscernible] Moving on to the operational and financial performance of the company. Company's 16 fund-based projects comprise 1 BOT toll projects, 2 BOT project and 13AMject project is INR 480 crores project [indiscernible] due to [indiscernible] Internal that would be generated over the next 2 to 3 years should be adequate to meet the above equity investment requirements. Now moving on to our order book. As of 30th September '25, the company unexecuted order book stands over INR 20,000 crores, which includes EPC value of Gopal bypass and project of MPRDC and newly secured high-level bridge project of [indiscernible]. Highway contribute around 55% of total unexecuted order book, while water area development and railways project contribute around 30% and coal mining project contributes 15% and [indiscernible]. This net debt to equity of [indiscernible]. On consol basis, our net worth as on 30 September '25 is INR 623 crores, whereas total debt is INR 549 crores. This translates to net debt to equity of 0.76x. The total cash and bank balance, including current investment is INR 2,736 crores. With this, we now open the floor for question and answer. Thank you.

[Operator Instructions] We take the first question from the line of Shravan Shah from Dolat Capital.

Sir, a couple of things to understand. So first on the revenue front. So in the first half, the revenue at a standalone is down INR 2,100-odd crores. So to achieve, we were looking at 15% to 20% kind of a growth. So the ask rate in the second half is significant kind of doubling the revenue in the second half. So just wanted to know now how we can look at the revenue for this year and also at the same time for next year also, how one can look at the revenue for FY '27?

Yes, there has been a decline in the revenue during the first half when you compare to last year's revenue. But as you know that even earlier also we shared with you, four HAM projects, which were awarded way back in 2023, appointed dates have not been declared till now. Of course, they have been declared for project appointed date was declared in September and another two projects appointed date declared in the first week of October. So otherwise, these projects had these projects been declared appointed date would have achieved a substantial work done during the current year as well as the previous year second half. But unfortunately, appointed dates got declared. And the value of these projects, the [indiscernible] is INR 4,000 crores. It's the main reason in the decline of the appointed date, and we never expected appointed date to be declared so delayed, declaration will be so delayed more than 2 years is the reason for the decline. And since now appointed date for 3 out of 4 projects already been declared, having a value of over INR 3,000 crores. So these projects will generate income going forward. And with regard to the guidance what we had given with regard to the guidance what we had given 10% to 20% with the declaration of appointed date delayed declaration of awarding date and also slow awarding activity by the NHA for the past 2.5 years, what our MD has mentioned now. So slow awarding, delay in declaration and also, of course, though phenomena every year. This year, the monsoon also has been very active and prolonged. With all these reasons, now we are revising our guidance from 15% to 20% to 5% of the -- over the previous year. That is a guidance kind of a thing. And now we are now -- currently, we are executing more than 20 projects, precisely 24 EPC projects having a value of more than INR 17,000 crores, including coal mining and solar projects. So with that kind of a revenue visibility is there, the unxecuted order book is there. So this 5% over the previous year, remaining work comes to around INR 2, INR 3,000-odd crores that we should be able to achieve during the H2 of the current financial year.

So now, sir, given that the growth will be lower, as you said, 5% in this year. So next year also because from that high base also, we were looking at 15%, 20% growth. So FY '27 can we see a kind of 30% kind of growth once all the app are now kind of received and the execution will start and maybe the kind of order inflow that we are looking at?

No, no. Certainly, we'll be aspiring to achieve that kind of growth during the FY '27. But for the -- as of now, since the FY '26 has not been completed and the base needs to be established, so still we maintain 20% growth for FY '27 as of now. So once some clarity emerges at what value we will be closing FY '26. So then we'll revise this one, we'll relook into this growth -- but as of now, we would like to maintain 20% growth in FY '27. But certainly, we'll be aspiring for 30% growth.

Got it, sir. And the current 13% margin is doable?

It should be 12.5% to 13% margin should be doable in the current financial year. And next year also, it will be around 13% margin should be there.

And in terms of now the order inflow, so that's the main pain point for the entire sector. So just wanted to understand, though in the opening remarks, sir has talked about the significant value 6,300 kilometers of NHI, crores all this. But actually, how do you see in terms of -- because so many kind of a cabinet approval, land acquisition, all this. So what we understand is 50 kilometer to maybe 3,000 kilometer. So just wanted to understand how much value of work from NHI can be awarded and how much order inflow now we are looking at? And that too, if you can also specify in terms of the HAM specifically and what are other state level or other segments where we are looking at and broadly how much the total order inflow now we are looking at?

See, we had mentioned in the beginning of the year and the last quarter of the last year, our order book for the FY '26 would be between INR 12,000 crores to INR 15,000 crores. We still maintain the same kind of guidance for the FY '26. So that means around another INR 6,000 crores plus order book we need to secure new business we need to secure. Given the project pipeline of NHA and other departments, there are -- we have identified around 70 projects we have identified for bidding during the next 1.5 to 2 months, comprising INR 1 crore of aggregate value of INR 1 lakh crores. So with kind of a pipeline, bidding pipeline is available. So we expect that we should be able to achieve another 6,000 plus new orders during the remaining 4.5 months of the current financial year.

Okay. Okay. Great. And then there also mostly it could be a HAM.

In case of NH, it would be HAM -- in case of other clients, it would be mostly...

Okay. Got it. And just on the JJM front, so now how do we see the -- particular JJM and the irrigation one. So how much revenue that now we can look at in this year? And when can we see both the projects to be fully completed?

See, under JJM, in the H1, we achieved INR 235 crores apart from certain revenue from the irrigation project. And we still maintain INR 900 crores from the JJM and irrigation for FY '26, kind of revenue, we still maintaining our guidance of INR 900 crores. And going forward, we are pursuing opportunities in both sectors also. So, we don't see further new projects will be coming in a major way. But in the water resource department sector, many projects are coming by different state governments. We are pursuing those opportunities.

We take the next question from the line of Ketan Jain from Avendus Spark.

So what is the order inflow so far till date in FY...

This includes the flyover projects but not the mining and the project this includes coal mining. This includes [indiscernible]. This includes high-level bridge in [indiscernible]. This includes [indiscernible] Airport project and solar power also.

Understood. And we do not have any L1 orders right now, right?

No. As of now, we don't have any L1 orders. Wherever we stood L1, we received the letters of...

We take the next question from the line of Aditya Sahu from HDFC Securities.

I wanted to understand. So in the asset monetization space, we have -- I think we have monetized 11 assets, 11 HAM assets, and we have one state that is. Do correct me if I'm wrong.

No, no. So the current position is that out of 12 assets, 11 assets we monetize, including the state asset we monetized in the Q2. Now NHA pending for which we have received the final approval for the change of control. rece received, we received today.

And this also we are sort of selling it to highway infrastructure?

Yes. Because it's a part of the master security purchase agreement we executed last.

So this one asset that is pending, what would be the equity invested? Because I think you have mentioned equity invested and the consideration for assets. This particular asset which is pending, what would be the equity invested and the consideration that we are expecting from this asset?

Equity invested is INR 14 crores.

Would be we have...

Enterprise value consideration is around INR 630 crores.

CapEx, what is the CapEx that we have done in H1? And what are you expecting for the balance [indiscernible]?

The total CapEx up to September 30 is INR 121 crores, and we are expecting that around INR 200 crores CapEx will be done in the total financial year '26.

Okay. So INR 200 crores overall. I may be repeating I think you mentioned it. The total equity investment for the 13 projects, if you could repeat that? And how much have we infused till date?

So total equity was INR 174 crores. Out of that, the balance equity is INR 663 crores yet...

We take the next question from the line of Deepesh Agarwal from UTI Asset Manager.

Sir, I wanted to understand like once again a couple of reasons. Firstly, why have we cut the guidance? And secondly, what has been main core reasons why we haven't seen revenue grow? And what are the few things we are looking which will help to grow in, say, Q3, Q4?

See, as you had mentioned in response to another question by another person that the primary reason for the decline in the turnover as well as the revising on a downside the guidance is because the delayed appointed dates for 4 major HAM projects having a revenue potential of more than INR 4,000 crores. The HAM projects were awarded way back in 2023, middle of 2023. But appointed dates have been appointed got delayed by more than 2 years. So had the appointed date been declared earlier, we would have achieved certain revenue in the current year as well as last H2 of the previous year, but we could not do it. That is the main reason for the decline in turnover. Second thing, for the last 2.5 years, the awarding activity of NHA is very subdued. It was very subdued. The new projects are not forthcoming from NHA and our projects which are coming are very, very smaller projects are coming which is kind of a very unhealthy competition. So that is another reason that we could not ship to any major projects during the last 2 years, particularly from NHA. So we revised the guidance to be more realistic. Going forward, out of 4 HAM projects declared the month of September and October. Now we are having unexecuted order book for the ongoing project itself of over INR 17,000 crores. So going forward, growth will be increased and we'll have a significant growth in FY '27 over FY '26.

And sir, just one last question from my end. So sir, for the -- with respect to order book, what are we targeting for the next 2 quarters and for FY '27? And how much orders have we bid for and approximately what might be the success ratio in that...

We have submitted bids for aggregate of INR 17,000 crores [indiscernible] submitted for INR 1,000 crores of Out EPC bids are HAM. Submitted two bids, but that we not included. And the bids we are hopeful at least 3,000 crores worth of project. And we [indiscernible] Next 1.5 to 2 months with aggregate value of INR even if you consider 3% to 5%, then still we have INR 3,000 crores to INR 5,000 crores plus INR 3,000 crores. So we are expecting another INR 6,000 plus new orders, INR 6,000 crores new orders before end of the current financial year. We take the next question from the line of Aniket.

And next question is...

Yes. So my question was with regards to the order book. So is it INR 7,000 or INR 20,000 unexecuted?

Unexecuted order book is INR 20,000 crores. Out of that INR 17,000 crores projects for which appointed dates have been declared or which are in active RDC, that is still because of land issues what you had mentioned on HAM project of MPRDC, Western [indiscernible] are certain land issues. So appointed date has not been declared. For another project, we are not executing the one due to legal issues.

500 top line in FY '26, right?

Yes, INR 5,000 plus top line in FY '26.

Could you throw some color on the revenue bifurcation expecting [indiscernible] how much it will be, how much it will be.

See FY '26, we are expecting from water and irrigation sector FY '26. remaining amount would be from the highways and other projects. Sorry... FY '26, we are expecting total INR 900 crores turnover from water, drinking water supply and irrigation projects. INR 4,000-plus crores from highways and other projects, including coal mining.

We take the next question from the line of Vaibhav Shah from JM Financial.

Sir, on the guidance, our revenue for FY '25 was INR 5,500 crores. You mentioned 5% growth. So is 5,500 base around 5,100. So can you provide actual number for '26?

As of now, we have taken INR 5,500 crores as the base.

So it should be somewhere around INR 1,500 crores... INR 10 crores.

Yes, yes.

Okay. Okay. Sir, secondly, when do we expect to receive the AD for MRD?

This is the issues. The land and alignment issues are still persisting. There is a bit of uncertainty for the turn. So we would not be able to share the -- what would be the appointed date likely appointed date. Going forward, we should be able to share in Q3 when we meet after Q3.

Likely come at least by March '26?

We are hoping so.

Okay. Sir, secondly, on the CapEx front, we had earlier guidance of INR 400 crores. Now we reduced it to INR 200 crores. So can '27 be a bump up in terms of CapEx?

Actually, we have given the guidance of INR 400 crores for the coal project. Out of that, we are planning to make the CapEx in this financial year is around INR 200 crores. And the rest will be done in the next financial year.

So total CapEx for '26 will be INR 200 crores?

It will be INR 200 crores?

And for '27?

'27 around INR 250 crores.

Okay. Okay. And sir, lastly, when do we expect to start the execution for mining and BS...

Mining already started the execution. Physical execution is underway.

Okay. And sir, just one clarification. Please. We are doing the preliminary work. We are -- the procurement process of procurement will start in Q4. Okay. Okay. And sir, any equity requirement for the T&D order. So what would be the value? For Solar project, you are talking..

Project, yes. See, equity requirement around INR 40 crores -- it will be around INR 400 crores subject to finalization of the financial package and discussions with the banks.

The HAM assets and [indiscernible] is in the subsidiary. So incrementally, how do you plan to invest the money in these assets? So it will partly from subsidiary and partly from stand...

It seems the [indiscernible] have been connected on the call.

We take the next question from the line of Shravan Shah from Dolat Capital.

Still just wanted a [indiscernible], when we are saying the 5% growth over INR 5,500 crores of FY '25 revenue that comes INR 5,800 crores, that means in the second half, we need to do a INR 3,700 crores kind of a revenue. So kind of INR 1,800 crores kind of a run rate quarterly. So do we think -- and if the third quarter is on the lower side, then the fourth quarter needs to be kind of significantly higher. So just trying to understand is this the number that we are looking at or there is a possibility that this number can go around?

See, as of now, we are looking at the similar kind of thing. As we now appointed dates, the progress is ramping up. third quarter number would be less than the fourth quarter number. But overall, we are looking at 5% this year. So given all the appointed dates have been declared. Until unless there is any adverse kind of a thing development and unexpected thing, so we should be able to meet this 5% target.

Okay. Got it. Second, sir, we were supposed to get a INR 14 crore bonus on project. When we will be receiving and booking in P&L...

We'll be booking in P&L in Q3. The approval process is underway. So once approved by NS FX body, so we'll be receiving during the Q3 INR 14.8 crores. we already received INR 5 crores.